ARMED with a war chest of Rs 300 crore, the domestic beer major, UB group, along with its strategic partner, Scottish & Newcastle (S&N), is on the prowl for brewery acquisitions in the crucial markets of Andhra Pradesh and Rajasthan.

The combine may also invest in greenfield capacities in three other States  Madhya Pradesh, Orissa and Uttar Pradesh.

Speaking to Business Line, Mr Ravi Nedungadi, President & Chief Financial Officer of the UB Ggoup, said the combine was already negotiating exclusively with the GMR group to buy out the latter's brewery located at Srikakulam in Andhra Pradesh.

The brewery has received a nod to increase its capacity to 3.6 lakh hectolitres from the existing 1.2 lakh hectolitres. The acquisitions will be routed through a joint venture SPV (special purpose vehicle) between UB group and S&N, he said.

Mr Nedungadi added that UB-S&N combine is also poised to takeover a brewery in Rajasthan.

Earlier, Mr Kalyan Ganguly, President, Breweries Division, UB group, said talks were on with Rajasthan Breweries lending credence to market speculation that a deal was imminent in this crucial north Indian market.

The combine is also expected to make strategic investments in greenfield projects in Madhya Pradesh, Orissa and Uttar Pradesh. It is reliably learnt that UB has entered into a tie-up with a greenfield brewery coming up in Gwalior, promoted by a local liquor bottler and an ally of UB group's spirits division.

The UB-S&N combine will enter the Tamil Nadu market soon as its local partner, Balaji group, is expected to complete work on the half-a-million hectolitre brewery in the State. Balaji Group has made arrangements with financial institutions for getting the project through, Mr Nedungadi said.

Mr Ravi Jain, former Managing Director of Shaw Wallace & Co Ltd, who is tipped to become head of the joint venture, said the entity will be jointly managed by both UB and S&N, with 40 per cent stake each.

It must be mentioned that S&N has committed Rs 175 crore for the venture. UB is expected to raise additional funds through debt on assets taking the cumulative resources earmarked for fresh capacities to Rs 300 crore, Mr Jain added.